Obama’s effort to ‘nudge’ America

For the past year, the Obama administration has been running
an experiment: Is it possible to make policy more effective by using psychology
on citizens?

The nickname is “nudging”—the idea that policymakers
can change people’s behavior just by presenting choices or information
differently. The classic example is requiring people to opt out of being an organ donor, instead of opting in, when they sign up for a driver’s license. Without any
change in rules, the small tweak has boosted the number
of registered organ donors in many states.

Nudging has gained a lot of high-profile advocates, including behavioral-law guru Cass Sunstein and former budget czar Peter Orszag. Not
everyone likes the idea—“the behaviorists are saying that you, consumer, are stupid,”
said Bill Shughart, a professor of public choice at Utah State University—but President
Obama was intrigued enough that he actually hired Sunstein, a law professor at Harvard who co-wrote the best-known book about the topic, “Nudge.”

The president officially adopted the idea last year when he launched the White House’s
Social and Behavioral Science Team (SBST), a cross-agency effort to bring behavioral science research into the policymaking process. Now the team has published its first
annual report on this experiment.

How did it go? Mostly, the efforts appear
to have worked, though it’s hard to know how much impact they’ll have. In part
this is because the SBST’s efforts are small—just 15 proof-of-concept projects
in its first year—and limited by agencies and laws in how bold they could be.Nevertheless, the findings produce a
few key insights:

1. Young people clearly respond to texts

One problem the team tried to address is an education issue
called “summer melt”—the fact that each year, 20 to 30 percent of high school
graduates who’ve been accepted to college just don’t matriculate for their
freshman year. Most of them are poor, the kind of students who would really
benefit from a college degree.The
Department of Education and the SBST partnered with a nonprofit organization to
send text messages to selectedstudents,
reminding them to complete certain required tasks before showing up on campus, like
filling out forms. The results: about 9 percent more poor students matriculated.

2. You can make federal vendors more honest with a
simple reminder

On certain transactions, federal vendors are required to pay
a fee on quarterly sales, which they self-report through an online form. To
improve honest reporting, the General Services Administration—the agency that manages the function
of different agencies—added a smallprompt
tothe top of the form asking
vendors to promise they were submitting accurate information. Lying on the
prompt has no legal repercussions, but it stillled to a $1.59 million increase in fees in one quarter, suggesting
that the respondents were more fully reporting their sales.

3. Doctors? Not that nudge-able

Peer pressure works on a lot of people; studies have shown
that people who see sentences like “9 out of 10 people pay their taxes on time”
are more likely to make their own payments on time. The nudge team tried this
out on doctors, sending letters to physicians who prescribed far more medicationsthan their peers informing them of
their abnormally high prescription rates. Did it work? Not this time: The letters
had no measurable effect on prescription rates.

OK, but is this
really nudging?

The team’s projects were definitely a form of prodding—giving
people little pokes to improve their behavior in some way. But the more
muscular form of “nudge” involves what experts call changing the “choice
architecture”—automatically enrolling employees in an optional 401(k), for
instance, or making organ donors opt out.

That’s largely not what the
government was trying here.

“A lot of the stuff I see
on here is just straightforward psychology, just thinking about ways in which
people react to forms and how they will be able to make it easier to fill out forms,”
said Michael Thomas, an assistant professor of
economics at Creighton University who has been skeptical about the uses of
behavioral science.

“I’d like to see more economic ideas get involved,” said Richard
Thaler, an economist at the University of Chicago who co-wrote “Nudge” with
Sunstein, “but so far that hasn’t happened.” (Thaler was still pleased with the
SBST’s results in its first year.)

Even modest prods can still make a difference,of course; government has long been
behind corporate America in following up to make sure its policies actually
work. Economist Justin Wolfers recently
wrote positively about this aspect of the program: that A/B testing each
policy idea helps ensure that government is functioning effectively.

Why hasn’t
the SBST used more economics in its projects? Maya
Shankar, a neuroscientist who created and now leads the SBST, says thatthe team works with other
agencies to design the projects and must navigate certain program constraints.
“We rely on their expertise to help to determine what
is possible and what is not possible in every given context,” Shankar said.

Whatever the reason, the result is that these projects,
while valuable, are less informative than they could be. The SBST team’s report
showed that 13 of its projects worked; one didn’t; and one was hard to tell. That’s
a good result for a small and inexpensive office. But when it comes to whether behavioral
economics could offer a new tool to push Americans toward different choices in
big-ticket areas like healthcare—or whether Americans would actually want that—the
evidence is still out.